Property ValuationIntermediateDelaware Exam
What is 'economic rent' versus 'contract rent' in a Delaware income property analysis?
AEconomic rent is the current lease rate; contract rent is the market rate
BEconomic rent is the market rate a property could command; contract rent is the actual rent per the leaseCorrect
CBoth are the same; the terms are interchangeable
DEconomic rent applies to commercial properties; contract rent applies to residential leases
Why Economic rent is the market rate a property could command; contract rent is the actual rent per the lease Is Correct
Answer B: Economic rent is the market rate a property could command; contract rent is the actual rent per the lease
Economic (market) rent is the rent a property could command in the current open market. Contract rent is the actual rent specified in the lease.
Exam Tip: Property Valuation
Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.
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